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NEWS ANALYSIS: Japan crisis puts global nuclear expansion in doubt

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NEWS ANALYSIS: Japan crisis puts global nuclear expansion in doubt

The crisis at Japan's Fukushima nuclear plants has prompted leadingenergy-consuming countries to review the safety of their existing reactors andcast doubt on the speed and scale of planned expansions around the world.

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The events at the Fukushima-1 plant already rank as the worst nuclearincident in the world since the Chernobyl disaster in what is now Ukraine in1986, and have renewed public fears about the safety of nuclear power.

The emergency comes at a critical time for the industry, with governmentsin most of the world's biggest economies looking to build new nuclear powerplants as they seek to build new baseload generation capacity withoutincreasing carbon emissions.

In China, the government ordered safety inspections of the country'sexisting nuclear plants and suspended approval of new projects.

China operates 13 nuclear plants and is building more than two dozenothers, putting it at the center of the global expansion of nuclear power.

Further ahead, the country has plans for another 50 or more plants as itstruggles to meet soaring demand for energy.

In India, the government has ordered safety checks at its existing plantsbut has not ordered a rethink of ambitious expansion plans.

"China and India will lead in the global construction of more than 80 GWover the next decade. As a minimum, we expect this incident will slowexpansion plans while lessons are learnt. In a more extreme scenario, therecould be a public backlash against nuclear power which could substantiallyreduce the planned build out," Bernstein Research analysts said last week.

GERMAN CLOSURE

One of the most immediate reactions to events in Japan came from Germany,where Chancellor Angela Merkel's government announced the temporary closure ofthe country's seven oldest nuclear reactors, with a combined capacity of 7 GW.

The reactors are being taken off line within the framework of athree-month moratorium on lifetime extensions in the Nuclear Energy Act.Passed in October 2010, the law extends the lifetimes of the seven reactorscommissioned before 1980 by eight years, and newer reactors by 14 years.

Widely criticized as unconstitutional, the moratorium may have to befollowed by an amendment to the law.

German public opinion was already hostile to the idea of new nuclearplant, and the country was looking to gradually replace existing nuclearcapacity with renewables.

Switzerland moved as swiftly as Germany in taking action. On March 14,Swiss President and Energy Minister Doris Leuthard said authorizationprocesses for three new reactors would be put on hold while safety standardswere checked and, if necessary, revised. Existing plants will also bere-examined, she said.

"In Japan there are two problems: the age of the reactors and theemergency systems. The situation is very similar in Switzerland. The damagedreactors in Japan are from the same generation as Muhleberg and Beznau.Fukushima-1 is more or less the same type of reactor as our 40-year-oldMuhleberg," said Walter Wildi, a former president of the Swiss Nuclear SafetyInspectorate.

There was a cautious reaction from the UK, where the government is hopingnuclear power will play an increasingly important role in generatinglow-carbon electricity.

UK REPORT

UK Energy and Climate Change Minister Chris Huhne called on chief nuclearinspector Mike Weightman to draw up "a thorough report on the implications ofthe situation in Japan and the lessons to be learned."

A draft, to be prepared in cooperation internationally with other nuclearregulators, is to be produced by mid-May and a final report by September.

"It is essential that we understand the full facts and theirimplications, both for existing nuclear reactors and any new program, assafety is always our number one concern," said Huhne.

In evidence to the Climate Change Committee on market reform, Huhne wascritical of politicians elsewhere in Europe rushing to judgement, butrecognized the Japanese disaster could damage investor appetite for nuclear,and was wary an over-reaction could increase costs of new build unnecessarily.

"France and the UK, the two EU countries where new nuclear plants are dueto be operating this decade are, due to their geography, more protected fromsuch natural disasters and therefore the new build program is unlikely tostop," Citi said in a report last week.

"In Germany, where a law extending nuclear lives was approved last yearbut faced strong opposition from the public and is being challenged by stategovernments, the anti-nuclear sentiment could intensify further," it said.

In the US, President Barack Obama has ordered the Nuclear RegulatoryCommission to conduct a "comprehensive" safety review of nuclear power plants.

Obama told a press briefing the US had gone through "exhaustive studies"to ensure safety under natural disasters, but that it could nonetheless learnfrom the crisis in Japan.

LONG-TERM IMPLICATIONS

Although global nuclear expansion plans may get back on track, someanalysts suggest the Fukushima disaster will have long-term implications.

Bernstein said it could prompt a longer-term shift to gas, with the worldbuying an additional 25-50 million mt/year of LNG, on top of the doubling ofLNG requirements from 200 million mt/year to 400 million mt/year over the nextdecade to 2020.

"The only low carbon fuel which can compete with nuclear power inbaseload power generation is natural gas. As a result of this incident, weexpect that gas-fired power generation will grow more quickly than expected,"Bernstein said.

Despite the challenges, global efforts to combat the negative effects ofclimate change cannot succeed unless nuclear power is part of world's mix ofelectricity generation, Societe Generale said in a report.

It said that in addition to 442 operational reactors around the world,103 GW of new nuclear power is expected to come online before 2020 and 162 GWbefore 2030.

"Nuclear is seen by many only as a 'bridge' to the future zero-emissionpower technologies to be developed and made economical for large scaledeployment. But this bridge is necessary," the bank said.

--Staff reports, newsdesk@platts.com

Similar stories appear in Nucleonics Week. See more information at http://bit.ly/NucleonicsWeek